Can China reboot its manufacturing industry—and the global economy—by replacing millions of workers with machines?

Will Knight writes: Inside a large, windowless room in an electronics factory in south Shanghai, about 15 workers are eyeing a small robot arm with frustration. Near the end of the production line where optical networking equipment is being packed into boxes for shipping, the robot sits motionless.

“The system is down,” explains Nie Juan, a woman in her early 20s who is responsible for quality control. Her team has been testing the robot for the past week. The machine is meant to place stickers on the boxes containing new routers, and it seemed to have mastered the task quite nicely. But then it suddenly stoppedworking. “The robot does save labor,” Nie tells me, her brow furrowed, “but it is difficult to maintain.”

The hitch reflects a much bigger technological challenge facing China’s manufacturers today. Wages in Shanghai have more than doubled in the past seven years, and the company that owns the factory, Cambridge Industries Group, faces fierce competition from increasingly high-tech operations in Germany, Japan, and the United States. To address both of these problems, CIG wants to replace two-thirds of its 3,000 workers with machines this year. Within a few more years, it wants the operation to be almost entirely automated, creating a so-called “dark factory.” The idea is that with so few people around, you could switch the lights off and leave the place to the machines.

But as the idle robot arm on CIG’s packaging line suggests, replacing humans with machines is not an easy task. Most industrial robots have to be extensively programmed, and they will perform a job properly only if everything is positioned just so. Much of the production work done in Chinese factories requires dexterity, flexibility, and common sense. If a box comes down the line at an odd angle, for instance, a worker has to adjust his or her hand before affixing the label. A few hours later, the same worker might be tasked with affixing a new label to a different kind of box. And the following day he or she might be moved to another part of the line entirely.

Despite the huge challenges, countless manufacturers in China are planning to transform their production processes using robotics and automation at an unprecedented scale. In some ways, they don’t really have a choice. Human labor in China is no longer as cheap as it once was, especially compared with labor in rival manufacturing hubs growing quickly in Asia. In Vietnam, Thailand, and Indonesia, factory wages can be less than a third of what they are in the urban centers of China. One solution, many manufacturers—and government officials—believe, is to replace human workers with machines

The results of this effort will be felt globally. Almost a quarter of the world’s products are made in China today. If China can use robots and other advanced technologies to retool types of production never before automated, that might turn the country, now the world’s sweatshop, into a hub of high-tech innovation. Less clear, however, is how that would affect the millions of workers recruited to China’s booming factories.

There are still plenty of workers around now as I tour CIG’s factory with the company’s CEO, Gerald Wong, a compact man who earned degrees from MIT in the 1980s. We watch a team of people performing delicate soldering on circuit boards, and another group clicking circuit boards into plastic casings. Wong stops to demonstrate a task that is proving especially hard to automate: attaching a flexible wire to a circuit board. “It’s always curled differently,” he says with annoyance.

But there are some impressive examples of automation creeping through Wong’s factory, too. As we walk by a row of machines that stamp chips into circuit boards, a wheeled robot roughly the size of a mini-fridge rolls by ferrying components in the other direction. Wong steps in front of the machine to show me how it will detect him and stop. In another part of the factory, we watch a robot arm grab finished circuit boards from a conveyor belt and place them into a machine that automatically checks their software. Wong explains that his company is testing a robot that does the soldering work we saw earlier more quickly and reliably than a person.

After we finish the tour, he says, “It is very clear in China: people will either go into automation or they will go out of the manufacturing business.”

Automate or bust

China’s economic miracle is directly attributable to its manufacturing industry. Approximately 100 million people are employed in manufacturing in China (in the U.S., the number is around 12 million), and the sector accounts for almost 36 percent of China’s gross domestic product. During the last few decades, manufacturing empires were forged around the Yangtze River Delta, Bohai Bay outside Beijing, and the Pearl River Delta in the south. Millions of low-skilled migrant workers found employment in gigantic factories, producing an unimaginable range of products, from socks to servers. China accounted for just 3 percent of global manufacturing output in 1990. Today it produces almost a quarter, including 80 percent of all air conditioners, 71 percent of all mobile phones, and 63 percent of the world’s shoes. For consumers around the world, this manufacturing boom has meant many low-cost products, from affordable iPhones to flat-screen televisions.

Workers at CIG retrieve items from one of several mobile robots that ferry materials around the facility.

In recent years, though, China’s manufacturing engine has started to stall. Wages have increased at a crippling 12 percent per year on average since 2001. Chinese exports fell last year for the first time since the financial crisis of 2009. And toward the end of 2015 the Caixin Purchasing Managers’ Index, a widely used indicator of manufacturing activity, showed that the sector had contracted for the 10th month in a row. Just as China’s manufacturing boom fed the global economy, the prospect of its decline has already started to spook the world’s financial markets.

Within a few years, CIG plans to have a largely automated operation—what’s sometimes called a “dark factory.”

Automation appears to offer an enticing technological solution. China already imports a huge number of industrial robots, but the country lags far behind competitors in the ratio of robots to workers. In South Korea, for instance, there are 478 robots per 10,000 workers; in Japan the figure is 315; in Germany, 292; in the United States it is 164. In China that number is only 36. Read the rest of this entry »

Thousands march on the legislature to demand a freer vote

Joanna Plucinska reports: Nine months after the Umbrella Revolution began, pro-democracy protesters again took to the streets of Hong Kong to demand a say in the way the city’s leader is elected in polls slated for 2017.

“We’re not North Korea, we know what freedom is.”

— Carol Lo, a protester at Sunday’s rally

A crowd of 2,000 to 3,000 people—workers and families as well as students and democracy activists—marched on Sunday afternoon from Victoria Park, a traditional gathering place for protests, to the legislature buildings downtown. Many carried yellow umbrellas—adopted as the symbol of Hong Kong’s democracy movement after protesters took to carrying them during last year’s unrest to protect themselves from police pepper spray.

Riot police use tear gas against protesters after thousands of people blocked a main road at the financial central district in Hong Kong, Sunday, Sept. 28, 2014. Hong Kong police used tear gas on Sunday and warned of further measures as they tried to clear thousands of pro-democracy protesters gathered outside government headquarters in a challenge to Beijing over its decision to restrict democratic reforms for the city. (AP Photo) HONG KONG

Others carried signs that read “Citizens Against Pseudo-Universal Suffrage,” declaring their opposition to the form of democracy described in a political reform bill to be voted on by the city’s legislature on June 17. That bill will allow the central government in Beijing, and a 1,200 member electoral college composed mostly of pro-establishment figures, to vet all candidates for the position of Chief Executive, as the city’s top official is known. Similarly unrepresentative electoral methods helped to spark last fall’s Umbrella Revolution, and protesters are once again demanding broader political rights.

“I’m a genuine citizen of Hong Kong, I’m not from China. Most people from China are after money, but I’m after truth.”

— Protester and Uber driver Chao Sang

“We’re not North Korea, we know what freedom is,” said Carol Lo, 35, a protester at Sunday’s rally and a parent of a 9-year-old girl. Lo voiced fears for the political future of Hong Kong’s next generation: “How will [my daughter] survive, if this situation gets worse and worse?” she said.

Policemen rest following pro-democracy protests in Hong Kong on September 29, 2014. Police fired tear gas as tens of thousands of pro-democracy demonstrators brought parts of central Hong Kong to a standstill in a dramatic escalation of protests that have gripped the semi-autonomous Chinese city for days. XAUME OLLEROS/AFP/Getty Images)

Another protester, Uber driver Chao Sang, voiced the growing tendency of many Hong Kongers to see themselves as politically, linguistically and culturally separate from mainland Chinese. “I’m a genuine citizen of Hong Kong, I’m not from China,” he told TIME. “Most people from China are after money, but I’m after truth.” Read the rest of this entry »